Key ASEAN states expected to recover from slump
Key ASEAN states expected to recover from slump
SINGAPORE (AFP): Singapore's top bank has forecast that except
for Indonesia, key ASEAN nations could recover from a slump and
possibly register positive economic growth rates this year.
Except for Singapore which emerged with a positive 1.5 percent
annual growth rate in 1998, all the top economies of the
Association of Southeast Asian Nations (ASEAN) slipped into
negative growth rates after grappling with a financial crisis.
The Development Bank of Singapore Ltd. (DBS), in its 1999
second quarter investment report, predicted a growth of 1.0-to-
2.0 percent for the Philippines and zero-to-1.0 percent for
Malaysia in 1999.
It also forecast growth of minus 0.5-to-0.5 percent for
Singapore, minus 1.0-to-zero percent for Thailand and minus 4.0-
to-minus 3.0 percent for Indonesia.
DBS said Indonesia's fragile social fabric was plaguing
economic reform efforts of the government, with political
tensions heightening in the run up to the June national
elections.
It forecast Indonesia's inflation rate falling from 58.5
percent last year to about 25 percent in 1999, with social
tensions complicating the food distribution network and keeping
up an upward pressure on food prices.
For Malaysia, DBS said an anticipated upturn of the global
electronics industry by the second half of this year would be a
welcome boost to recovery efforts.
The report noted substantial progress in Malaysia's banking
reforms and said the country's ability to meet its total funding
needs also looked more assured.
In addition, Malaysia's softening stance in capital controls
could help nullify potential portfolio outflows, it said.
"We expect Malaysia to enter a period of consolidation this
year," DBS said.
The Singapore bank said a GDP growth of 1.0-to-2.0 percent
growth in 1999 for the Philippines should be within reach.
The Philippines' economic slowdown in 1998 was caused by both
the regional crisis and unfavorable weather.
"The later is expected to abate by the second half of 1999,
while the former will continue to drowse economic activity for
the year," DBS said.
Revival in primary production, which account for around half
of GDP, would ensure growth for the Philippines, it added.
For Thailand, DBS said a minus 1.0 percent-to-zero percent
real GDP rise was still on the cards this year although some
indicators such as the manufacturing production index should
begin to show positive growth by the second quarter.
It cautioned that Thailand still needed to speed up its bank
recapitalization to check private sector capital outflows and
rise in non-performing loans.
On the home front, DBS said while external demand,
particularly electronics exports, showed some signs of a pick up,
Singapore's structural export competitiveness still lagged behind
that of its Asian neighbors.